Molycorp buys Neo Material for C$1.3 billion
TORONTO (Reuters) - Rare earth miner Molycorp MCP.N is set to buy Neo Material Technologies NEM.TO in a C$1.3 billion ($1.31 billion) cash and share deal that will give Molycorp access to Neo's rare earth processing capabilities and patents.
The friendly deal will see Colorado-based Molycorp pay C$8.05 in cash plus 0.122 of a share for each share of Toronto-based Neo Material. That would amount to a total consideration of C$11.30 per share, based on Molycorp's 20-day average.
Molycorp chief executive Mark Smith told Reuters that the deal will bring together the Molycorp's massive production capacity at the Mountain Pass mine in California and Neo's advanced rare earth processing capabilities.
"(We are)putting those two together and forming the best full supply chain capability known in the industry," he said.
Rare earth oxides, used in products as diverse as Apple's iPhone and Toyota's Prius, require extensive processing in order to take them from rocks in the ground to a material that a technology company can use.
China currently produces about 95 percent of the global supply of the group of 17 metals. The country has repeatedly clamped down on rare earth exports, which last year sent prices of the individual oxides, metals and alloys soaring.
Neo, which owns facilities in China, Thailand, Germany and North America, produces rare earth oxides, alloys and magnetic powders. The company also processes various minor metals like gallium, rhenium and indium.
Molycorp said it will leverage Neo's years of processing experience to better serve its existing customers. The purchase will also give Molycorp access to new customers that require high purity, product-specific rare earth oxides and alloys.
The deal, Molycorp's third in the last year, will give the American company a foothold in China, which is the top consumer of rare earths. Continued...